Celsius Allowed to Proceed with Flare Token Distribution

Troubled crypto lender Celsius has received permission from the bankruptcy court to distribute Flare’s network token (FLR) to eligible account holders, a court order filed on 24 January revealed.

According to the document, Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York has authorized the bankrupt crypto lender to credit eligible account holders with the FLR they were entitled to. Flare — a Layer 1 blockchain and oracle provider — distributed FLR tokens to anyone who held at least one XRP token during a December 2020 snapshot.

Celsius — which itself qualified to receive 150 million of the tokens — had a grant distribution agreement with Flare, meaning that customers who held XRP within their Celsius accounts at the time of the snapshot were also expected to receive tokens. The crypto lender, however, filed for Chapter 11 bankruptcy last July, and now needed the approval of the court to grant the tokens to eligible account holders.

Judge Glenn also authorized Celsius to return funds transferred to the crypto lender after it had filed for bankruptcy in the form of crypto “net of any gas fees or transaction costs”. If a withdrawal exceeds $40,000 — and the customer received over $200,000 from Celsius during the three months leading to its bankruptcy — the appointed committee of creditors will need to give its approval first.

During the Tuesday hearing, Celsius’ lawyers proposed a plan to reorganize the company into a “publicly-traded company that is properly licensed”, claiming that this would return more value to creditors than simply liquidating its assets. If this plan gets approved, Celsius will issue a new token — that will reflect the value of the assets managed by the company, and entitle holders to dividends over time — to creditors with locked assets above a certain threshold, while the rest will receive a one-time distribution of liquid crypto.